Page 1 July 2014 Capacity Building of Banks/FIs For EE Project Financing Capacity Building of Banks and Financial Institutions for Energy Efficiency Project Financing Module 5 Measurement and Verification (PACE-D) Partnership to Advance Clean Energy-Deployment (PACE-D) Technical Assistance Program September 2014

Page 2 July 2014 Capacity Building of Banks/FIs For EE Project Financing Why Measurement and Verification (M&V)? Key Considerations in M&V Basic Concept of M&V M&V Methodologies M&V Protocols Common Issues The M&V Document Case Studies Presentation Outline

Page 3 July 2014 Capacity Building of Banks/FIs For EE Project Financing Measurement and verification: Is needed to confirm project energy savings and validate that anticipated or guaranteed performance has been achieved Presents common definitions, terminology and procedures for energy- efficiency projects Improves communication and understanding among project implementing partners Provides a risk management tool to financing entities Minimizes disagreements and disputes Facilitates persistence of energy savings Why M&V

Page 4 July 2014 Capacity Building of Banks/FIs For EE Project Financing Key Considerations in M&V

Page 5 July 2014 Capacity Building of Banks/FIs For EE Project Financing Who Should Conduct M&V?

Page 6 July 2014 Capacity Building of Banks/FIs For EE Project Financing The costs of M&V depend on the energy efficiency technologies and measures to be implemented and the approach and methodology to be utilized M&V costs 5 to 10% of project investments Trade off between  accuracy of the M&V  cost of M&V Simple approaches are preferred to reduce costs and minimize potential for disputes How much does M&V cost?

Page 7 July 2014 Capacity Building of Banks/FIs For EE Project Financing If the project host conducts or engages a third party to conduct M&V, the host directly pays the M&V costs If the ESCO conducts or engages a third party to conduct M&V, the M&V costs are part of ESCO’s costs In either case, the M&V costs are an integral element of project cost and an allowance needs to be made in the project budget and financing plan for these costs While the M&V is specified in the Energy Services Agreement between the ESCO and host, the lender needs to understand and approve the M&V approach and costs Who Pays for M&V Costs?

Page 8 July 2014 Capacity Building of Banks/FIs For EE Project Financing Key Elements of an M&V Plan

Page 9 July 2014 Capacity Building of Banks/FIs For EE Project Financing Basic M&V Concept

Page 10 July 2014 Capacity Building of Banks/FIs For EE Project Financing Assessing Energy Savings

Page 11 July 2014 Capacity Building of Banks/FIs For EE Project Financing M&V Methodologies

Page 12 July 2014 Capacity Building of Banks/FIs For EE Project Financing M&V methodologies

Page 13 July 2014 Capacity Building of Banks/FIs For EE Project Financing M&V Protocols

Page 14 July 2014 Capacity Building of Banks/FIs For EE Project Financing IPMVP Developed by a coalition of researchers and practitioners Managed by independent organization (EVO) dedicated to provision of tools to quantify the results of EE projects and programs. Provides flexible framework of M&V options that allows practitioners to craft the right M&V Plan for their project Internationally recognized and accepted Certification program for M&V professionals Implemented in India by Alliance for Energy-Efficient Economy (AEEE) International Performance Measurement and Verification Protocol

Page 15 July 2014 Capacity Building of Banks/FIs For EE Project Financing First M&V Seminar Delhi April 2005, PCRA hosted for EVO M&V Fundamentals trainings in various cities of India Application of M&V to Government Schemes – Building Codes, PAT, DSM CMVP Certification Training & Exams in Delhi – Nine rounds completed more than 100 professionals certified EVO has Certified 5 Indian Trainers as CMVP Trainers AEEE has conducted M&V Training in Manila and Bangkok Opportunity to widen M&V capacity building to South & West Asia M&V Training and Certification in India

Page 16 July 2014 Capacity Building of Banks/FIs For EE Project Financing India has over 100 CMVPs

Page 17 July 2014 Capacity Building of Banks/FIs For EE Project Financing Retrofit Isolation Methods  Option A – Partially measured or one time measurement  Option B – Longer or continuous measurements Whole Facility Methods  Option C – Whole facility energy analysis  Option D – Computer simulation M&V Approaches in IPMVP

Page 18 July 2014 Capacity Building of Banks/FIs For EE Project Financing Illustration of IPMVP Options

Page 19 July 2014 Capacity Building of Banks/FIs For EE Project Financing Adjusting for Changes in Baseline

Page 20 July 2014 Capacity Building of Banks/FIs For EE Project Financing Adjusting for Changes in Baseline Possible Changes in Baseline Possible Changes in Baseline Facility Use or Operating Conditions Occupancy Equipment Operating Schedules Environmental Conditions Additions to Energy-Using Equipment Facility Refurbishment or Rehabilitation

Page 21 July 2014 Capacity Building of Banks/FIs For EE Project Financing IPMVP M&V Options

Page 22 July 2014 Capacity Building of Banks/FIs For EE Project Financing Simple approach (and low cost) Performance parameters are measured (before and after), usage parameters may be estimated Used where the “potential to perform” needs to be verified but accurate savings estimation is not necessary Key features  Low cost  Simple procedure  Requires agreement among parties Option A 22

Page 23 July 2014 Capacity Building of Banks/FIs For EE Project Financing Under Option B, some or all parameters are measured periodically or continuously Applicable where accurate savings estimation is necessary and long- term performance needs tracking Reduced uncertainty, but requires more effort Key features  “Real” M&V  Improved O&M  Ongoing Commissioning  Remote monitoring Option B 23

Page 24 July 2014 Capacity Building of Banks/FIs For EE Project Financing Option C looks at energy use and cost of entire facility, not at specific equipment Conceptually simple, may be difficult in practice Key features:  Can consider weather, occupancy, etc.  Useful where total savings need to be valued but component savings do not  Commercial software is available that simplifies implementation  May require baseline adjustments Option C 24

Page 25 July 2014 Capacity Building of Banks/FIs For EE Project Financing Option D treats building as computer model Flexible, but requires significant effort Applications:  New construction  Energy management & control systems  Building use changes  Building envelope modifications & additions Uses specialized software that requires substantial experience Requires measurements for calibration Option D 25

Page 26 July 2014 Capacity Building of Banks/FIs For EE Project Financing Baseline is 100 W light bulb and new lamp is 25 Watt compact fluorescent Wattage verified by measurements/specifications Assume 3,000 operating hours per year:  Previous experience  Estimate by owner Calculated Savings are: 3,000 hr/yr * ( kW) = 225 kWh/year Example of Lighting Project M&V - Option A

Page 27 July 2014 Capacity Building of Banks/FIs For EE Project Financing Install meters on lighting circuits (before lighting retrofit is implemented) Measure consumption before and after retrofit for a specified time period Calculate savings Lighting Project M&V - Option B

Page 28 July 2014 Capacity Building of Banks/FIs For EE Project Financing Used when lighting is the dominant load Document baseline utility bill Obtain post-installation utility Bills Calculate savings Lighting Project M&V - Option C

Page 29 July 2014 Capacity Building of Banks/FIs For EE Project Financing Used when interactive effects need to be estimated Input lighting and HVAC system into simulation program. Calibrate model and calculate pre- and post-installation lighting and interactive HVAC energy use for determining savings. Lighting Project -Option D

Page 30 July 2014 Capacity Building of Banks/FIs For EE Project Financing M&V Options with Multiple End-Uses

Page 31 July 2014 Capacity Building of Banks/FIs For EE Project Financing Factors affecting saving performance  Predictability, measurability, factors such as weather, occupancy, equipment intensity, ability of EEMs to deliver savings, implementation effectiveness, occupant – operator cooperation, equipment deterioration and life Evaluating saving uncertainty  Instrumentation error, modeling error, sampling error, planned and unplanned changes Minimum energy Standards Minimum operating conditions Common M&V Issues

Page 32 July 2014 Capacity Building of Banks/FIs For EE Project Financing Energy Prices  For simplification, price is specified Verification by a third party  Third party can resolve issues Baseline adjustments  Routine and non-routine Cost  Cost to owner against benefits Common M&V Issues (continued)

Page 33 July 2014 Capacity Building of Banks/FIs For EE Project Financing 1. Project site and measures 2. M&V option selected - Options B or C 3. Details for calculations  Data collection plans  Assumptions  Energy rates 4. Baseline equipment and conditions  Equipment, space conditions, assumptions, energy use relative to production, adjustments – how and when M&V Information Document

Page 34 July 2014 Capacity Building of Banks/FIs For EE Project Financing 5.Post-installation equipment and conditions  Plan for defining new equipment and space conditions, assumptions and stipulations 6. Metering  Schedule of metering (duration/when), who will provide, data validation, sampling 7. Measurement and verification activities  Who conducts M&V, analysis and prepare report, quality assurance, reports defined and post installation energy use relative to production 8. Initial and annual cost M&V Information Document (continued)

Thank you Dilip R. Limaye Mahesh Patankar Finance Team USAID PACE-D Technical Assistance Program